Why is the UK so uncompetitive?

[Quattrocento]

I have spent the day talking to a UK group of companies that wants to relocate to Switzerland.

Their thinking is roughly as follows:

UK rates of corporation tax are 28% versus Swiss rates of tax of around 9% at worst

UK rates of income tax of 50% versus Swiss rates of around 20%.

The list of UK companies that have relocated to Switzerland is as long as your arm. Just this week a UK FTSR 100 company went abroad see here for the Wolseley story

Memo to Adenoidal Ed and his ilk - Next time you lot want to tax the rich until the pips squeak, just remember that the rich are MOBILE and are in no way obliged to foot the bill for your £56bn budget deficit.

Funnily enough, a friend is about to leave his (very good) job because his company wants him and his family to up sticks and move to Switzerland. His main problem is that the cost of living is a lot higher, he'd need private schools for the kids... all kinds of hidden extras that offset lower personal taxation.

You sculpt your taxation round the kind of society you want to create. 50% income tax only applies to people earning £150k+ p.a. and that's only 1% of the workforce. If you were to compare our taxation and cost of living with places like France or Belgium, we don't do all that badly.

While I can perfectly well understand why a company would want to move to a low tax economy the people who work for the company often feel far less benefit. The cost of living is the big issue and many people fnd that going to live in a tax haven is really not all that nice. The Swss Franc is also incredibly strong at the moment so the salary costs of the company may have to go up to mantain the standard of living of employees. A small Head Office move with the highest paid staff and Directors is usually what comanies do and leave the main operation in the UK otherwise the tax benefit is often outweighed by costs of paying and retaining staff.

On a personal level, I know someone who went to live in the Isle of Man and hated it, other complain Switzerland is so very orderly and claustrophobic. Me and DW very nearly went to live in Guernsey but even the few days we were there it did seem a strange place.

The decision is not a pure economic one but I can see why companies and some highly paid individuals want to move to low tax countries and Govts of all developed Western nations need to be aware of that.

Too right on Belgium Chil - everything is expensive here. I get books/electronics/CDs/DVDs etc from Amazon; all my clothes are mail order and I come back to shoe shop for ds as I'd be looking at 140 euros plus for a pair of Caterpillar boots for him. Food isn't cheap either, and I hit Sainsbury's a lot when I'm home and stock up for 3 months at a time.